Question
Your firm has an average collection period of 28 days. Current practice is to factor all receivables immediately at a discount of 1.8 percent. Assume
Your firm has an average collection period of 28 days. Current practice is to factor all receivables immediately at a discount of 1.8 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.)
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To find the effective cost of borrowing we can use the formula Effective cost o...
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Fundamentals of corporate finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
9th edition
978-0077459451, 77459458, 978-1259027628, 1259027627, 978-0073382395
